EUR/USD is correcting to near 1.1150 in Wednesday’s European session, as the Euro weakens on the possibility of firm ECB rate cuts. The US Dollar is regaining ground, with focus on US core PCE inflation data.
The US Dollar Index (DXY) is edging higher to near 100.80 from recent lows, as market participants view the current mild recovery as a selling opportunity. The outlook for the Greenback remains vulnerable due to optimism surrounding potential Fed interest rate cuts in September.
While traders have priced in Fed rate cuts for September, there is uncertainty over the size of the cut. The CME FedWatch tool shows a 34.5% chance of a 50-bps cut, with the remaining favoring a 25-bps cut.
Investors are awaiting US core PCE inflation data for July, scheduled for Friday, to gauge the potential rate-cut size. A decline in inflation could lead to more aggressive policy easing by the Fed.
Market Movers: EUR/USD Slumps as Euro Weakens
- EUR/USD drops from highs of 1.1200 as the Euro weakens on expectations of ECB rate cuts in September.
- The ECB’s decision to leave key rates unchanged in July reflects concerns about inflationary pressures and economic uncertainty in the Eurozone.
- With evidence of economic uncertainty and easing wage pressures, the ECB is expected to cut rates by 25 bps in September.
- Investors are awaiting HICP data for Germany and the Eurozone to get fresh cues on the interest rate cut path.
Technical Analysis: EUR/USD Falls to Near 1.1150
EUR/USD is nearing 1.1150 after hitting a high at 1.1200. The currency pair’s outlook remains firm, supported by a breakout of a Symmetrical Triangle chart pattern and a 20-week EMA near 1.0900.
The RSI indicates strong upside momentum, with potential resistance levels at 1.1275 and 1.1500. The psychological support level is expected to hold near 1.1000.
Euro FAQs
For those new to the Euro, here are some key facts:
- The Euro is the currency used by 20 EU countries in the Eurozone, with a significant share of global foreign exchange transactions.
- The ECB in Frankfurt manages Eurozone monetary policy, focusing on maintaining price stability through interest rate adjustments.
- Eurozone inflation data, economic indicators, and trade balance are crucial factors influencing the Euro’s value.